Russia can take no notice of another year of sanctions, - Bloomberg

Russia can pay no regard to sanctions for another year, at least from the standpoint of bond market.

A 44 percent drop in Eurobond maturities to $16.7 billion in 2016 means borrowers can ride out penalties in 2016 that have frozen state oil giant Rosneft OJSC and the nation's largest lender Sberbank PJSC out of the capital markets since July 2014 and raised borrowing costs for others. Support from government loans and a cushion of current-account surpluses will be enough to keep Russian companies current on payments, according to Giuliano Palumbo, a Milan-based money manager at Arca SGR.

With little need to sell debt abroad, Russian companies may prolong a drought of Eurobond issuance after year-to-date sales slumped to the lowest since 2001, according to data compiled by Bloomberg. The hiatus in borrowing in 2016 may not last as a maturity wall of $72 billion hits corporate and sovereign issuers in the following two years, the data shows.

Sanctions "do matter, but not enough to end up with serial defaulters," Palumbo, who helps oversee $3 billion in emerging-market debt at Arca, said by e-mail Friday. "The bulk of redemptions will be in 2017 and 2018, when the external refinancing risk will pick up significantly."

To meet almost $30 billion of bond maturities this year, Russian companies turned to funds made available by the Bank of Russia and local lenders, allowing them to buy back outstanding bonds. The redemptions have cut outstanding amounts due in 2016 by more than $3 billion to $13.5 billion, according to Bloomberg data.

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